With the London interbank offered rate going away by 2021, picking a new index to serve as the benchmark for adjustable-rate mortgages is the easy part. Industrywide implementation is where things get tricky.

Origination and servicing systems will need to be updated to accommodate the new benchmark and those revisions have to be applied in a consistent manner across myriad platforms, which are often customized to meet lender and servicer specifications, said John Levonick, director of regulatory compliance at Clayton Holdings. Failure to do so could invite a new wave of legal and regulatory scrutiny to the mortgage industry, particularly if consumers are harmed.

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